Goldman Sachs Posts $2B Profit

Banking Giant's 2Q Earnings Not Likely to be Duplicated by Other Hard-Hit Banks

(AP)  Goldman Sachs Group Inc. said Tuesday its second-quarter profit easily surpassed expectations as profit was buoyed by strength in its trading and underwriting businesses.

Long considered one of the strongest banks in the financial sector, analysts widely expected Goldman's profit to continue its rebound. Goldman posted a quarterly loss during the final quarter of 2008 amid the mushrooming credit crisis before returning to profitability in the first three months of 2009.

During the quarter ended June 26, the New York-based banking giant earned $2.72 billion, or $4.93 per share, after preferred stock dividends.

Goldman recorded a charge of 78 cents per share as it repaid the government's $10 billion investment in the bank as part of the Troubled Asset Relief Program. The bank had previously announced it would be taking the charge during the second quarter.

Goldman is the first bank to report second-quarter earnings, and analysts predict other banks' results may not be as strong. Others face greater loan losses because of their focus in retail banking, and their more conservative approach to business after the credit crisis could hinder a return to strong profits.

Bank of America Corp. and Citigroup Inc. have been among the hardest hit by loan losses and have yet to repay government bailout funds. JPMorgan Chase & Co. has repaid the government, but still remains saddled with rising consumer loan losses. All three banks report results later this week.

Goldman's results were even better than its fiscal second quarter last year. For that period, which ended May 30, Goldman reported a profit of $2.05 billion, or $4.58 per share. Goldman shifted its quarterly reporting periods after changing its regulatory structure to become a bank holding company last fall amid the deepening credit crunch.

Analysts polled by Thomson Reuters, on average, forecast earnings of $3.54 per share for the quarter on revenue of $10.66 billion.

Goldman's second-quarter net revenue totaled $13.76 billion. It generated $9.42 billion in revenue during its fiscal second quarter last year.

The bank reported a record $6.8 billion in revenue from fixed income, currency and commodities trading during the quarter. Particularly strong trading in credit and interest rate products and currencies help boost Goldman's fixed income, currency and commodities trading. Equities trading revenue totaled $3.18 billion during the quarter due in part to stronger trading in derivatives. It generated $811 million in revenue from principal investments.

After credit markets nearly shut down last fall, equity and debt markets began to recover during the spring as investors optimism for an economic recovery began to grow. During that recovery, companies that had been stretched for capital flooded equity and debt markets with new offerings to raise sorely needed cash.

Goldman was able to take advantage of that crush of offerings, generating record net revenue of $736 million from underwriting equity offerings during the quarter. Total underwriting revenue, which also includes underwriting debt offerings, totaled $1.07 billion during the quarter.

Goldman's profit would have been better had it not been for a charge taken to repay the government investment.

In early June, Goldman became one of the first banks to repay the government TARP funds it received. The government provided banks with capital in exchange for preferred stock and warrants to purchase common shares. The program was launched last fall after Lehman Brothers collapsed and insurer American International Group Inc. needed a government bailout to remain in business.

The government investment also included certain restrictions, such as caps on executive compensation.

Chafing at the restrictions, and with the cash available to repay the debt, Goldman paid the government the $10 billion to cover the loan. The warrants to purchase common shares, however, remain outstanding.

[joule18]

My bank just raised my monthly fee for keeping an account there after accepting bailout money and remodeling their banks interiors. They also bought all new ATM machines. The charge NSF fees that are outrageous. It you have 5 debit card transactions on the same day and 4 would have cleared, they put through the largest first and charge their fees on all the rest. 4 fees instead of 1! Bank of America is raking in millions with this scheme.

[walt1944]

Its SSSOOOO nice to hear that Corporate America is posting such big profits thanks to our government's consistent financial taxpayer bailouts and the keeping of the George W. Bush tax cuts for BIG business and its millionare/billionare CEO's.

Tim Geitnier is overjoyed with the news and has run to Obama to CROW that the "light is at the end of the tunnel"!

Who cares about the millions of people out of work, are barely surviving on unemployment (if they are still getting unemployment!), are working at Wal-Mart part-time at below minimum wage! Who cares that millions don't have and couldn't afford health care even if they were working at Wal-Mart anyway! Who cares about all those families living in shelters or under viaducts because they lost their homes to those very same BIG businesses that were "bailed out" by the taxes of those very same homeless families!!! Who cares about those 600,000 jobs we were TOLD would happen in 6 months but are probably being BLED to China and India by RICH Corporate America!!!!!

Who Cares??? Timmy doesn't!!! And Obama????? "No 2nd stimulus required; FOR YOU!!!"!!!

HAIL OBAMA???????????????

[noloyalisti]

This is yet another typical corporate scam to steal taxpayer money. How much did we give these crooks? How much have they given out to their aristocratic corporate elite? Where are those numbers.

Anyone who trusts these corporations and these corporate media reports is an even bigger fool than Republicans. Corporations = Rape and Pillage. Wheeeeee!

[gold_standard]

How can you lose when you have the Treasury Secretary in your back pocket?

[GiveMeFreedom]

Hey Obama - need to tax Goldman Sachs some more. No way these crooks need to make another $5 billion this year.

No better to tax those of us lucky enough to make $200,000 per year. YOu know we are the truly wealthy. Heck these billionaires and hundred millionaires at Goldman Sachs are barely eeking by.

[whitemale08]

Goldman Sucks and JP Morgan makes 'record profits' AGAIN, all with taxpayer money funding at the TALF window at the illegal Federal Reserve System.

Goldman Sucks and JP Morgan 'never loses money', sound familiar?

of course, Goldman Sucks and JP Morgan are PONZI scams, no different then Bernie Madoff or Stanford.

They are worse then Bernie Madoff and Sanford and for anybody to believe that Goldman Sucks contributed anything positive to the American economy, where? how?

CALL CONGRESS AND DEMAND THAT GOLDMAN SUCKS AND JP MORGAN BE PUT OUT OF BUSINSESS NOW!!

GOLDMAN SUCKS AND JP MORGAN ARE THE PARASITES OF THE AMERICAN TAXPAYER!

Goldman Sucks uses rigging software to cheat with 'one-way-bets' to rig the markets and then poses as a counter-party on the other side of their credit-default swaps which the American taxpayer backstops with bail out guarantees.

THIS IS FRAUD FRUAD FRAUD!

GOLDMAN SUCKS IS 'PRINTING MONEY' ...COUNTERFEIT MONEY!

DAMN GOLDMAN SUCKS!!!!!

[Kuei1248]

I told everybody the bailout was nothing more than a huge scam! I told them this would happen before the stimulus plan went into action. One bank sees another get billions so they all rewrite their books to hide profits and show huge losses. All in the name of greed. How did this help hard working americans? It didn't. Look at the huge unemployment rates while the banks still rake in billions in profits. Where do you think it's coming from?